California budget includes cash payments for most taxpayers

California Legislature
Posted at 6:36 AM, Jun 28, 2022
and last updated 2022-06-28 09:36:19-04

SACRAMENTO, Calif. (AP) — Most California households would get up to $1,050 from the government to help them put the nation's most expensive gasoline in their cars, part of a relief package in the state's record-setting operating budget that lawmakers are scheduled to approve later this week.

The proposal would send cash directly to taxpayers instead of suspending the state's tax on fuel, which accounts for 51.1 cents per gallon of the price at the pump and is scheduled to increase nearly another 3 cents on Friday.

While some other states have halted their fuel taxes and Democratic President Joe Biden has called for a suspension of the national gas tax, Democrats who control California's government have refused to do the same because they said they didn't trust big oil companies and refineries to pass along the savings to drivers.

Instead, California officials plan to send $9.5 billion to about 23 million people — accounting for about 10% of the state's record-breaking $97 billion budget surplus. The money would go to people regardless of whether they owned a car, but only couples who make less than $500,000 per year and single people who make less than $250,000 per year are eligible to get it.

People who buy 15 gallons (57 liters) of fuel twice per month would pay roughly $194 per year in California gas taxes. Meanwhile, the lowest amount a household would get under this plan would be $200 for a single person with no children who makes $250,000 or less per year. The most money a household would get would be $1,050 for a married couple with children that earns $150,000 or less per year.

“I think California families would rather see their savings in their pocket,” Democratic Assemblymember Wendy Carrillo said. “The savings and the gas rebate that we are currently proposing is much, much better.”

The Newsom administration said it will be October before taxpayers would get the money, or 10 months into a year of record-high gas prices. Republicans criticized the move, saying drivers could have been saving all along if the state had quickly suspended its tax on fuel.

"Enough waiting, talking and investigating. People need relief now,” Assembly Republican Leader James Gallagher said.

The proposal is the centerpiece of California's $307.9 billion operating budget that lawmakers are scheduled to approve later this week. Despite initial dire projections, California's revenues have soared throughout the pandemic, fueling record surpluses.

All of that money has allowed lawmakers to greatly expand a number of government programs. One of the most impactful will be extending government-funded health care benefits to all low-income adults regardless of their immigration status.

Right now, people living in the country illegally can only qualify for California's Medicaid program if they are 26 and younger or 50 and older. The budget says by 2024, everyone who meets the income requirements will be covered — at a cost of $2.6 billion per year to taxpayers.

"This budget investment reflects California’s values of inclusion and fairness and should be a model for the rest of the nation,” said Sarah Dar, director of health and public benefits policy at the California Immigrant Policy Center.

The budget would leave $37.1 billion in the states' savings accounts to prepare for a future economic downturn. While California revenues have been strong, the independent Legislative Analyst's Office says the economy has showed signs of weakening as inflation remains high and home sales have slowed in part because of a rapid rise in mortgage rates.